Israel Electric Corporation (IEC) (TASE: ELEC.B22) has raised NIS 1.5 billion in a bond offfering backed by a state guarantee. The utility expanded previously issued bond series on the basis of a prospectus. Demand for the issue was NIS 3.1 billion.
IEC expanded two bond series: its one-year unlinked Series 23 bond bearing 2.28% annual interest by NIS 1 billion; and its Series 24 three-year CPI-linked bond bearing 0.3% annual interest by NIS 500 billion.
The issue is part of the government aid plan announced by the Ministry of Finance to deal with IEC's cash flow crisis caused by the ongoing natural gas shortage and the utility's need to use more expensive and polluting fuels for the generation of electricity.
So far this year, IEC has raised NIS 5.9 billion in government-backed debt.
IEC chairman Yiftach Ron-Tal said, "The successful offering and the demand mark the successful completion of a historic process, which began with the recently published prospectus after ten years during which the company did not publish a public prospectus. The capital raised enables the company to continue meeting its commitments and is a vote of confidence by the Israeli government in general and the minister of finance and the director general of his ministry in particular in IEC, its soundness, intentions, and capabilities."
IEC Eli Glickman said, "IEC successfully raised NIS 1.5 billion at a very competitive interest rate. This offering was accompanied by the execution of a prospectus, and is a very important step for IEC. This step will make it possible to further diversify financing sources in the future, and will keep IEC as an active reporting company in the Israeli capital market. During the summer of 2012, the cost of fuel for the generation of electricity was NIS 100 million a day, which was why the capital raises was urgently needed to improve the company's cash flow."
Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012